lexlaw winding up petitions HMRC

HMRC Petitions: Compulsory Court Winding-Up

HMRC regularly present more petitions than any other single creditor. When it comes to a HMRC Petition we have the perfect skillset with which to provide those facing HMRC winding-up petitions the best insolvency defence, advice and advocacy representation before any Court in England & Wales. The approach we adopt for our clients will help ensure you emerge from the liquidation process as financially intact as possible.

In recent times, His Majesty’s Revenue & Customs (HMRC) has allocated substantial resources to reclaim unpaid taxes and escalated their enforcement measures, which encompass legal actions like statutory demands, asset seizures, and the issuance of winding-up petitions.

Prompt action is crucial. If you find yourself facing a tax debt, it’s essential to proactively communicate with HMRC early on. Ignoring the matter often leads to proceedings in the Insolvency courts. At Lexlaw, our experienced HMRC Defence legal team specialises in guiding both companies and individual taxpayers through these challenges, whether they involve statutory demands or winding-up petitions.

Winding-up petitions on the whole are most often deployed by HMRC as a debt recovery weapon of last resort and the issuing of petitions is informally described within HMRC as their tool to “cleanse capitalism”. Before a petition is issued by HMRC they will usually issue a HMRC Statutory Demand first. Our team is ready to provide assistance.

Check Your Litigation Case ✔

We analyse your case prospects. We deliver strategic legal advice at your first fixed fee meeting. We get optimal legal results. Want our opinion on your case? Click below or call our lawyers in London on ☎ 02071830529


Please note that if you have been warned about your file being passed to HMRC’s Solicitor’s Office or have been served a statutory demand or winding-up petition do not delay in taking legal advice. Your matter can be handled more effectively the sooner you contact us.

What is a HMRC winding-up petition and what does it entail for the company?

A winding-up petition is a formal legal document filed by a creditor, in this case HMRC, with the intention of compelling the compulsory liquidation of a company if the tax debt (such as Corporation Tax, VAT, PAYE or NIC) is not paid. When a winding-up petition is submitted to the court, it signifies that the petitioner, HMRC, believes the company is unable to meet its financial obligations, and as a result, should be shut down. An ICC Judge is bound to take seriously any petition issued by HMRC and any company facing the same ought to take urgent legal advice because if the winding-up petition is granted by the court, it can lead to the company’s assets being sold and the proceeds used to pay off its debts. Following this process, the company is typically dissolved, effectively ceasing its operations. The liquidator is bound to check the director’s conduct and loan account and has the right to obtain all bank and accounting information.

It’s important to note that a winding-up petition is a serious legal step that can have significant consequences for the company, its directors, and stakeholders. Therefore, if a company receives a winding-up petition, seeking legal advice promptly is crucial to understand the best course of action and potential options available.

When do HMRC issue a winding-up petition?

HMRC state in their literature accompanying the postal service of a HMRC petition that (i) they only start winding-up proceedings because companies or partnerships owe HMRC money and (ii) that  HMRC will usually have taken other debt management steps (such as Time to Pay arrangements) or enforcement action to obtain payment and the business has either not paid at all or made unacceptable proposals for settling the debt.

HMRC may issue a winding-up petition against a company if they believe the company owes unpaid taxes and efforts to recover the debt through other means have been unsuccessful. This action is typically taken when HMRC believes the company’s financial situation is such that it is unable to meet its tax obligations.

Reasons for HMRC issuing a winding-up petition could include:

  1. Unpaid Taxes: The company has accrued a significant amount of unpaid taxes, such as VAT, PAYE, or Corporation Tax.
  2. Previous Attempts Failed: HMRC may have previously attempted to collect the debt through other means, such as issuing reminders, demands, or even pursuing legal action like statutory demands.
  3. Severe Financial Distress: HMRC believes the company is in severe financial distress and may not be able to meet its tax obligations in the future.
  4. Failure to Engage with HMRC: The company may have not engaged with HMRC in a satisfactory manner to address the outstanding tax debt.
  5. Exhaustion of Alternative Options: HMRC may have exhausted other available avenues for recovering the debt.

It’s important for the company and its directors to seek professional advice promptly upon receiving a winding-up petition to understand the specific circumstances and determine the best course of action. This may involve negotiating with HMRC, disputing the debt, or exploring other options to address the outstanding tax liabilities.

How much does the debt have to be to issue a winding-up petition?

The debt on a HMRC petition will, as per all petitions be for a sum of at least £750, and will usually be in the order of tens to hundreds of thousands of pounds. We have successfully defended HMRC petitions where debts have been well in excess of one million pounds. HMRC will include in their petition a breakdown of the debt figure which denotes how they arrive at the total figure.

The monies owed to HMRC could be for unpaid VAT returns, unpaid VAT assessments, PAYE payments, Employer’s National Insurance Contributions, unpaid corporation tax and so on.

What is the procedure for HMRC to issue a Winding-up Petition?

Winding up petitions may be issued at Court against either a Company or a Partnership, the latter (a petition to wind up a partnership) is usually when issued by HMRC accompanied by individual HMRC bankruptcy petitions for each of the partners.

A HMRC winding up petition is the precursor to the compulsory liquidation of a company or the dissolution of a partnership if not properly dealt with by the Directors or Partners and in essence means that the Revenue, their solicitor’s office and their barrister is asking the Court to wind up your business and have an insolvency practitioner distribute the assets of that business amongst all creditors.

If the Companies Court Registrar agrees with HMRCs barrister at the court hearing of the petition to liquidate and close down the company then the Court issues a winding-up order. The Company then has to cease to trade. The bank account will have already become frozen on advertisement of the petition by HMRC. The Official Receiver, a Government civil servant, then investigates the company and the conduct of the directors. The assets are liquidated to pay of the debts of the company by a nominated Insolvency Practitioner.

Are there any specific documents or information that HMRC requires in response to the winding-up petition?

Yes, when responding to a winding-up petition from HMRC, it’s important to consider with the benefit of legal advice, providing specific documents and information to address the situation effectively. These may include:

  1. Financial Statements: These documents provide an overview of the company’s financial position, including its assets, liabilities, income, and expenses.
  2. Evidence of Disputed Debt: If the company disputes the debt claimed by HMRC, it should provide supporting evidence or documentation to demonstrate why the debt is in question.
  3. Communication History: Any correspondence or communication between the company and HMRC regarding the debt should be included to provide context and demonstrate attempts to resolve the issue.
  4. Cash Flow Forecasts: These forecasts can help demonstrate the company’s ability to meet its financial obligations in the future and potentially avoid winding-up proceedings.
  5. Proposed Payment Plan: If the company intends to propose a payment plan or arrangement to address the debt, this should be outlined in detail.
  6. Evidence of Solvency: Providing evidence that the company is solvent and capable of meeting its financial obligations can be crucial in disputing a winding-up petition.
  7. Legal Advice: Any legal advice or opinions received regarding the winding-up petition should be documented and submitted.
  8. Company Records and Registers: These documents may include shareholder registers, director information, and details about the company’s operations.
  9. Corporate Governance Information: Information about the company’s corporate governance structure, including board meetings and decision-making processes, may be relevant.
  10. Evidence of Ongoing Business Operations: Demonstrating that the company is actively engaged in legitimate business operations and has a viable business plan can be important.

It’s important to consult with legal and financial advisors to ensure that all necessary documents and information are provided in response to the winding-up petition. This will help present the company’s case effectively and may increase the likelihood of reaching a resolution with HMRC.

What happens at the winding up petition hearing?

After presentation of the winding up petition, the Court is formally involved and a date will be set for a winding up petition hearing which must be advertised in the interests of the entire body of creditors of the company. The winding-up petition hearing is a critical legal proceeding where the court evaluates the merits of the petition and determines whether to grant or dismiss it. Here is what typically happens at a winding-up petition hearing:

  1. Appearance of Parties: The petitioner (usually HMRC or another creditor) and the company in question will be represented by their legal counsel. The directors or representatives of the company may also be present.
  2. Presentation of the Petition: The petitioner’s legal counsel will present the winding-up petition and provide arguments supporting the need for compulsory liquidation. They will typically outline the details of the debt owed and the company’s failure to pay.
  3. Company’s Response: The company’s legal counsel will have the opportunity to respond to the petition. They may present evidence disputing the debt, providing reasons why the petition should be dismissed, or proposing alternative arrangements, such as a payment plan.
  4. Consideration of Evidence: The court will review the evidence and arguments presented by both parties. This may include financial documents, communication history, and any additional information relevant to the case.
  5. Questions and Clarifications: The court may ask questions or seek clarifications from both parties to better understand the circumstances surrounding the debt and the company’s financial situation.
  6. Adjournment or Decision: Depending on the complexity of the case and the information presented, the court may either make an immediate decision or adjourn the hearing to allow for further deliberation.
  7. Judgment: If the court grants the winding-up petition, it signifies that the company will proceed with compulsory liquidation. The court will typically appoint an official liquidator to oversee the process.
  8. Dismissal of the Petition: If the court dismisses the petition, it means that the company will not be subject to compulsory liquidation, and it can continue its operations.

It’s crucial for the company’s legal counsel to present a strong case during the hearing, backed by relevant evidence and legal arguments. Additionally, directors and representatives of the company should be prepared to provide any necessary information and respond to questions from the court. Seeking professional legal advice and representation is essential in navigating the complexities of a winding-up petition hearing.

What is the timeline for the winding-up process, and what key milestones should we be aware of?

The timeline for the winding-up process can vary depending on various factors, including the complexity of the case, the efficiency of the legal proceedings, and the specific circumstances of the company. However, here is a general outline of the key milestones and approximate timeline for the winding-up process:

  1. Receipt of a Statutory Demand (Day -21): The company has 21 days notice of a potential winding-up petition. If HMRC has issued the demand then you should understand they are extremely likely if not guaranteed to next issue a winding-up petition. Companies must take urgent legal advice from a specialist solicitor.
  2. Receipt of Winding-Up Petition (Day 1): The process typically begins when the company receives the winding-up petition. This initiates a critical period for the company to respond and take necessary actions.
  3. Legal Response and Preparation (Days 1-7): The company has a limited time frame to respond to the winding-up petition. During this period, the company should engage legal counsel, gather relevant documents and information, and prepare its defense.
  4. Winding-Up Petition Advertisement (Day 7 onwards): The Petition can be advertised 7 clear days after service on the Company. Advertisement is a serious risk factor as the Company bank accounts will be frozen. Advice on injunctions to restrain should be sought well in advance.
  5. Hearing (Day 28-56): The winding-up petition hearing takes place in court on the date stated on the front of the petition. This is where both the petitioner and the company present their arguments, and the court decides whether to grant or dismiss the petition. This hearing could be adjourned.
  6. Judgment (Day 28-56): Following the hearing or adjourned hearing, the court will render a judgment, either granting or dismissing the winding-up petition. If granted, this marks the beginning of the compulsory liquidation process.
  7. Appointment of Official Liquidator (Shortly After Judgment): If the winding-up petition is granted, the court will typically appoint an official liquidator to oversee the liquidation process and handle the distribution of assets to creditors.
  8. Notification to Creditors (Within Days): The official liquidator will notify creditors of the company’s insolvency and provide instructions for filing claims.
  9. Compulsory Liquidation Process (Ongoing): The official liquidator will take control of the company’s assets, sell them, and distribute the proceeds to creditors in accordance with the statutory order of priority.
  10. Dissolution (Several Months): Once the liquidation process is complete and all debts and expenses have been paid, the company will be formally dissolved.

It’s important to note that these timeframes are approximate and can vary based on the specific circumstances of each case. Additionally, the company’s ability to negotiate, challenge the petition, or propose alternative arrangements can influence the timeline.

Seeking legal advice early in the process is crucial to understanding the specific timeline and key milestones relevant to the company’s situation. This will help directors and stakeholders navigate the winding-up process effectively.

Who attends the winding up petition hearing and where is it?

The petitioner, creditors, anyone with an interest in the company’s property, the company and its’ shareholders all have the right to attend the hearing and be heard at the hearing.

In London, winding up petitions are heard at the High Court of Justice, Business and Property Courts of England and Wales in the Insolvency and Companies Lists (commonly called the Companies Court). The list is usually heard every Wednesday from 10:30am in the Rolls Building, Fetter Lane, London, EC4A 1NL.

We are located 5 minutes walk from the Court and are therefore able to provide urgent representation. However, this is subject to capacity and receiving instructions in a timely manner.

Are there any options available to challenge or dispute the winding-up petition?

Yes, there are several options available to challenge or dispute a winding-up petition. These may include:

  1. Proving the Debt is Disputed: If the company believes that the debt claimed by the petitioner (usually HMRC or another creditor) is not valid or is in dispute for legitimate reasons, this can be presented as a defense.
  2. Negotiating with Creditors: The company may attempt to negotiate a settlement with the petitioner or other creditors to resolve the debt without resorting to winding-up proceedings.
  3. Seeking an Adjournment: The company can request an adjournment of the winding-up hearing, giving it more time to address the debt or explore alternative solutions.
  4. Applying for an Administration Order: In certain cases, the company may apply for an Administration Order, which can provide breathing space to restructure and potentially continue trading.
  5. Challenging the Petition on Technical Grounds: There may be legal or procedural grounds on which the winding-up petition can be challenged, such as if it was improperly served or if there are errors in the documentation.
  6. Appointing an Insolvency Practitioner: The company may appoint an insolvency practitioner to act as an intermediary between the company and its creditors, potentially leading to a Company Voluntary Arrangement (CVA) or other restructuring option.
  7. Disputing the Validity of the Statutory Demand: If a statutory demand was served prior to the winding-up petition, the company may dispute its validity if it believes it was not properly served or if there are grounds for challenging the debt.

It’s important to note that each case is unique, and the available options will depend on the specific circumstances and the laws of the jurisdiction involved. Seeking legal advice from a qualified professional experienced in insolvency and corporate law is crucial in determining the best course of action for challenging or disputing a winding-up petition.

Can I get an Injunction to stop a HMRC Winding-up Petition?

An injunction may be a possibility to prevent HMRC from advertising or proceeding to present a winding-up petition against your company. However, it’s important to understand the circumstances and legal arguments involved.

  • Grounds for Injunction: A court may grant an injunction if you can show HMRC’s actions were abusive or amounted to misuse of the legal process. In one example where we successfully restrained HMRC, our client company successfully argued that freezing their accounts, then petitioning to wind them up due to unpaid taxes they couldn’t access, was abusive.
  • Evidence Required: A strong case requires evidence to support your claim. This could include documentation of HMRC’s actions, communication records, and proof that you were trying to resolve the tax issue.
  • Court Challenge: Obtaining an injunction typically involves applying to the Insolvency and Companies Court. Legal representation is advisable due to the complexities involved. Here is one such case study where our client company defeated a £0.5m HMRC Winding-up Petition for unpaid taxes.

HMRC may argue against an injunction, citing limitations on using them against government departments. However, there are precedents where courts have allowed injunctions in such cases. Also, while injunctions can be an option, exploring alternative solutions with HMRC like negotiating a payment plan or disputing the tax debt might be a faster and less expensive approach. If you’re facing a winding-up petition from HMRC and considering an injunction, consulting with a solicitor specialising in tax and insolvency law is crucial. We can assess your situation, advise on the best course of action, and represent you in court if necessary.

What are the potential consequences if the winding-up petition is granted by the court?

If a winding-up petition is granted by the court, it can have serious and far-reaching consequences for the company. Some of the potential consequences include:

  1. Compulsory Liquidation: The court’s approval of a winding-up petition initiates the process of compulsory liquidation. This means that the company’s assets will be sold, and the proceeds will be used to pay off its debts.
  2. Closure of Operations: The company will cease its normal business operations. This includes the termination of contracts, dismissal of employees, and the discontinuation of any ongoing projects.
  3. Dissolution: Once the assets have been liquidated and the debts paid off, the company will be formally dissolved. This means it will no longer legally exist as an entity.
  4. Loss of Control: During the liquidation process, control of the company’s affairs is typically handed over to a liquidator appointed by the court. This individual is responsible for overseeing the winding-up process and distributing the proceeds to creditors.
  5. Impact on Directors and Shareholders: Directors may face personal liability if they are found to have acted improperly or negligently in the lead-up to the winding-up. Shareholders may lose their investments in the company.
  6. Credit Implications: The company’s credit rating will be negatively affected, making it more difficult for directors or shareholders to obtain credit in the future.
  7. Legal Proceedings: Directors may face legal action if it is determined that they breached their fiduciary duties or engaged in wrongful trading.
  8. Reputation Damage: The company’s reputation will be adversely affected, which can have long-lasting consequences for the directors and shareholders involved.

It’s important to note that the specific consequences can vary depending on the circumstances and the jurisdiction in which the company operates. Seeking professional legal advice early on is crucial to understanding the full implications and exploring any potential options available to address the winding-up petition.

What are the implications for me personally as a director if the winding-up petition is successful?

If a winding-up petition against the company is successful and the court orders compulsory liquidation, there are several potential implications for you personally as a director:

  1. Personal Liability: As a director, you may be held personally liable for certain company debts if it is determined that you engaged in wrongful or fraudulent trading, or if you breached your fiduciary duties.
  2. Disqualification as a Director: If the court finds that you acted improperly or negligently in the lead-up to the company’s insolvency, you may face disqualification from acting as a director for a specified period.
  3. Investment Loss: Any personal investments you made in the company may be lost. This could include shares or loans you provided to the company.
  4. Loss of Employment: You will no longer be employed by the company, as it will cease operations upon the initiation of the liquidation process.
  5. Restrictions on Future Directorships: If disqualified, you will be prohibited from acting as a director or participating in the management of any company for the duration of the disqualification period.
  6. Impact on Credit Rating: Your personal credit rating may be adversely affected if you personally guaranteed any company debts or if you were a co-signatory on financial agreements.
  7. Potential Legal Actions: If it is found that you breached your duties as a director, you may face legal action from creditors, shareholders, or insolvency practitioners.
  8. Professional Reputational Damage: Your professional reputation may be negatively affected, which can impact your ability to secure future roles or positions in the business community.

It’s important to seek legal advice early in the process to understand your specific situation and take appropriate steps to mitigate potential personal liabilities. Consulting with insolvency professionals and legal experts can help you navigate the complex legal landscape and make informed decisions.


Please note that if you have been warned about your file being passed to HMRC’s Solicitor’s Office or have been served a statutory demand or winding-up petition do not delay in taking legal advice. Your matter can be handled more effectively the sooner you contact us.

Expert HMRC Petition Solicitors

As specialist winding up lawyers, we can help the company to get enough time to manage or settle large debts or to dispute the monies claimed in the petition.

With the correct legal guidance it is perfectly possible to obtain time and resolve the debt even if HMRC won’t initially agree to sensible time to pay proposals; there are legal arguments and applications that can be deployed in the company’s favour. If the company cannot repay all its HMRC debts, we can also advise on a range of other solutions that will allow the company to continue to trade.

The insolvency and Court rules relating to winding up proceedings are a technical minefield; as expert winding up petition solicitors we help our clients to avoid suffering the ‘usual compulsory order’. We assist by protecting the companies interests and by negotiating with creditors and advising and representing the company at Court.

Retaining insolvency solicitors and barristers in particular assists in dealings with HMRC who will know a company is taking matters seriously and responsibly when the company instructs specialists such as ourselves.

When a business is insolvent or is served with a HMRC petition and runs the risk of becoming wound up, the owner or the directors have a duty to act in the best interests of the creditors. Failing to do so risks personal liabilities and possible directors disqualification proceedings.

We provide specialist senior legal advice from solicitors and barristers at the outset when it absolutely matters in choosing the best strategy to follow (especially when dealing with the defence of a HMRC petition).

We assist our clients by:

The potential legal costs associated with contesting or responding to a winding-up petition can vary widely depending on several factors, including the complexity of the case, the amount of debt involved and the quality of legal representation chosen. Here are some potential legal costs to consider:

  1. Solicitor’s Fees: This includes the fees charged by solicitors for providing legal advice, preparing legal documents, representing the company in court, and conducting any necessary research or investigation.
  2. Court Fees: These are fees required to file documents with the court, such as the response to the winding-up petition or any other legal submissions.
  3. Barrister Fees: In some cases, a barrister may be engaged to provide specialist advice or representation in court. This is in addition to solicitor fees. We have in-house barristers at our firm, thus saving costs.
  4. Administrative Costs: This includes expenses related to document preparation, photocopying, postage, and other administrative tasks associated with the legal proceedings.
  5. Disbursements: These are additional costs incurred in the course of legal proceedings, such as travel expenses, court reporter fees, or fees for obtaining official documents.
  6. Court-Appointed Insolvency Practitioner Fees: If the winding-up petition is granted, a court-appointed insolvency practitioner may be involved in the liquidation process. Their fees will be borne by the company’s assets.
  7. Mediation or Alternative Dispute Resolution Costs: If parties attempt to resolve the dispute through mediation or alternative dispute resolution methods, there may be associated fees.
  8. Appeal Costs: If the case progresses to an appeal, there will be additional legal costs associated with the appeal process.

It’s important to note that legal costs can accumulate quickly in litigation cases, and they can be a significant financial burden for the company. Directors and stakeholders should carefully consider their budget and explore options for financing legal expenses if necessary. Additionally, seeking transparent or fixed fee structures and discussing potential costs with us upfront can help manage expectations and avoid surprises later in the process.

HMRC Petition Advice from the Experts

Facing an HMRC winding-up petition can be a daunting situation. Our experienced team of solicitors and barristers specialises in providing urgent assistance and expert legal advice. Contact us today for an immediate consultation. We’re here to support you through this process.

Check Your Litigation Case ✔

We analyse your case prospects. We deliver strategic legal advice at your first fixed fee meeting. We get optimal legal results. Want our opinion on your case? Click below or call our lawyers in London on ☎ 02071830529


The Limitation Act 1980 sets out strict statutory deadlines within which you must bring litigation claims. Your legal rights will become irreversibly time-barred if you fail to take legal action (or defend a claim on time). Therefore, you should seek specific legal advice about your legal dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.

Please note that for regulatory reasons we do not offer any free advice.